British households are bracing for another increase in their energy bills, with the typical annual dual-fuel bill projected to rise by 1 per cent to £1,762 when Ofgem updates the price cap in April, according to forecasts from energy consultancy Cornwall Insight.
The anticipated rise, driven by escalating wholesale gas prices and higher network charges, marks a significant shift from earlier predictions of a modest decline. The consultancy had previously forecast a 1 per cent fall to £1,713 following Ofgem’s January cap increase to £1,738.
Current energy costs remain approximately 50 per cent above pre-crisis levels, when the price cap averaged £1,100 annually. Cornwall Insight suggests additional reforms to the price cap, including allowances for energy-intensive industries, could push the figure even higher to £1,782.
European gas prices have surged to near 12-month highs, trading at €45.5 per megawatt/hour, up substantially from February’s 30-month low of €24 per MWh. The increase has been attributed to heightened Asian demand following summer heatwaves and increased international competition for supplies.
Craig Lowrey, principal consultant at Cornwall Insight, characterised the 2024 energy landscape as “a perfect storm of regulatory changes and market turbulence.” The UK’s increased dependence on liquefied natural gas imports, following efforts to reduce Russian pipeline supplies post-Ukraine invasion, has contributed to market volatility.
Labour’s energy strategy focuses on reducing British gas dependence through expanded renewable energy capacity. Think tank Ember’s analysis suggests 2024 will mark the first year renewables contribute more to UK electricity generation than fossil fuels, potentially offering some hope for future price stabilisation.
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